If you’re hunting amongst the FTSE 100 for brilliant dividend shares there’s plenty to be excited about.
Britain’s blue-chip index has long proved a happy hunting ground for investors seeking market-busting yields and stocks with impressive records of lifting shareholder reward. Indeed, I spend much of my time discussing some of the best income bets that the Footsie has to offer.
It’s easy to be tempted to narrow your focus on the FTSE 100 given the vast amounts of media and broker coverage that such businesses attract, giving share pickers the best chance of making the right investment decision. But restricting your search to London’s main markets means that a lot of top-class companies slip through the net.
International Personal Finance (LSE: IPF) is a little-known small cap that could fall into this category.
Sure, the business may have paid a full year dividend of 12.4p per share for three consecutive years, with City analysts predicting an identical payout for 2018 as well. But this dividend still yields a very handsome 5.5%.
What’s more, this forecast payout also looks pretty secure, being covered 2.5 times by predicted earnings (inside the widely-accepted security area of two times and above).
Added to this, a suspected return to profits expansion in 2019 leads to City expectations that it will finally have the strength to lift the dividend again, a 12.6p reward currently anticipated. This yields 5.5% and is covered 2.6 times by anticipated profits.
It’s easy to see earnings, and thus dividend expansion, accelerating beyond next year too, as it embarks on its ambitious growth strategy (issued credit growth in IPF Digital’s new markets climbed 33% from January to June, for example).
Another secret dividend star
I’m convinced that Empiric Student Property (LSE: ESP) should also continue delivering yields above the broader market.
As I noted last time out, the UK’s universities have a reputation for being the best in the world and as a consequence, students from all around the world flock here in massive numbers. And Empiric is expanding its operations to benefit from this rush.
The company operates in almost 30 of the best university locations up and down the country, and in the first fiscal half it boosted the number of assets on its books to 95 following the acquisition of a location in Southampton. As of June, it operated 9,398 beds versus 9,158 in the corresponding 2017 period.
Back in November, Empiric announced its intention to pay reduced dividends as part of a bid to build dividend cover, and advising that it would follow last year’s 5.55p per share reward with a 5p reward in the current period.
It’s worth noting, though, that such a figure still yields a mighty 5.1%. And City projections for an identical payment in 2019 means that the yield remains elevated.
Empiric’s forward P/E ratio of 28.6 times means it is far costlier than International Personal Finance, the latter sporting a corresponding readout of 7.4 times. I am convinced that both are great selections for those looking to generate a fortune by retirement, however.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.